103. Security for tax payable by withholding: (1) The tax required to be withheld by a person who has to withhold tax pursuant to Chapter-17 has to be given preference to any payment to be made by the order of a court or as per any other law or in any other manner.

(2) The following provisions shall apply in respect of the tax withheld by a person who has to withhold tax pursuant to Chapter-17:-

(a) The tax withheld by such a person as well as the property, if any, received for such tax shall be deemed to have been withheld for Government of Nepal,

(b) The amount of tax so withheld cannot be attached to the loan or liability of such a person, and

(c) In cases where the person withholding such tax becomes bankrupt or is dissolved, the amount of tax so withheld shall not be treated as a part of the assets so become bankrupt or dissolved; and in making division upon such dissolution or bankruptcy, the Department shall have the first lien over the tax withheld or over the property.

104. Lien over property: (1) Notwithstanding anything contained in the laws in force, in cases where any person does pay tax on the due date for payment of tax, the lien of Government of Nepal shall be deemed to have been created over the property of the person who is in arrear of tax.

(2) In claiming the property over which the lien is created pursuant to Sub-section (1), the Department has to give that person a written notice setting out the following matters:-

(3) In making claim over the property pursuant to Sub-section (2), the claim shall be created only to the extent of the tax due and payable by such a person, interest and claim to be paid in respect of such tax pursuant to Section 119 and the expenses incurred in auction sale.

(4) The claim made pursuant to Sub-section (2) shall not lie unless and until the following matter takes place:-

(a) Until the Department gives information to have the claim registered pursuant to Sub-section (6) in respect of the building and land,

(b) Until the Department possesses such property pursuant to Sub-section (3) of Section 105 in respect of other direct/tangible property, and

(c) Until the notice referred to in Sub-section (2) is given to the person who is in arrear of tax, in any other circumstances whatsoever.

(5) In cases where the person who is in arrear of tax pays to the Department all the amounts referred to in Sub-section (3) and covered by the claim made pursuant to Sub-section (2), which are due and payable by such a person.

(6) In cases where the Department makes a claim over any land or building pursuant to Sub-section (2), information has to be given to the concerned Land Revenue Office; and that Office has to so withhold such land or property that it cannot be sold and disposed of to or ownership to it cannot be transferred to any person.

(7) In cases where the claim over the land and building has to be released pursuant to Sub-section (5), the Department has to give information thereof to the Land Revenue Office. Upon receipt of such information, the Land Revenue Office has to release the land and building so withheld.

(8) The Department has to promptly give the person in arrear of tax a notice setting out the following matters, in respect of the expenses to be incurred pursuant to Sub-section (3):

(a) The expenses incurred by the Department for the claim on the property of the person in arrear of tax and for the auction sale thereof, prior to giving such a notice, and

(b) The date on which the person in arrear of tax has to pay such expenses to the Department.

Explanation: For purposes of this Section, "expenses incurred for claim and auction sale" means the following expenses incurred or to be incurred by the Department:

(a) The expenses incurred or to be incurred by the Department in creating or releasing the claim over the property, or

(b) The expenses incurred or to be incurred by the Department pursuant to Section 105 in possessing, holding and auctioning the claimed property.

105. Auction sale of the claimed property: (1) The department has to give the person in arrear of tax a notice on auctioning the claimed property held by the person in arrear of tax.

(2) The notice given pursuant to Sub-section (1) may be included in the notice given pursuant to Sub-section (2) of Section 104 or attached with such a notice. Such a notice has to clearly set out the following matters and be given to the person in arrear of tax:-

(a) The property claimed and the mode and time of auction or sale of the property, and

(b) In respect of a tangible property, mode and place of possessing the property by the Department.

(a) To have possession of the tangible property mentioned in the notice at any time,

(b) To enter into any premises mentioned in the notice referred to in Sub-section (1) for the purpose of having possession of the tangible property at any time,

(c) In respect of the tangible property except the land or building, to keep such properties in such place as thought proper by the Department at the expense of the person in arrear of tax.

(4) In cases where the Department has given the notice referred to in Sub-section (1) to the person in arrear of tax, it may, in the following time, publicly auction such claimed property or sell and dispose of or use such property in such manner as thought proper:

(a) If the claimed property is the land or building, after thirty days of the date of possession of such property pursuant to Sub-section (3),

(b) If the claimed property is a perishable tangible property, after one day of the date of possession pursuant to Sub-section (3),

(c) If the claimed property is a tangible property except those properties mentioned in clause (a) or (b), after ten days of possession pursuant to Sub-section (3), and

(d) If the claimed property is any other kind of property, after ten days of possession of such property pursuant to Sub-section (3).

(5) The expenses incurred in having claim and auctioning the property auctioned shall first be deducted from the proceeds derived from the auction sale pursuant to Sub-section (4). After the expenses are so deducted, the payable tax and the interest payable on the tax pursuant to Section 119 shall be deducted; and then, if any amount remains balance, such amount shall be refunded to the person in arrear of tax.

(6) After the proceeds derived from the auction sale have been adjusted pursuant to Sub-section (5), the Department has to give a written notice setting out the process of the adjustment to the person in arrear of tax.

(7) In cases where, in adjusting the proceeds derived from the auction sale by following the process referred to in Sub-section (5), the proceeds are not sufficient to fully pay the amounts for the expenses mentioned in that Sub-section, tax and interest, the Department has to re-institute the action to recover the shortfall amount pursuant to Section 104, 111 or this Section.

Explanation: For purposes of this Section,

(a) "Claimed property" means the property of the person withholding tax, who is in arrears of tax, mentioned in Sub-section (2) of Section 103 or Sub-section (2) of Section 104.

(b) "Expenses incurred in making claim and auction sale" means the expenses incurred in making claim and auction sale pursuant to Section 104.

(c) "Person in arrear of tax" includes the person withholding tax mentioned in Sections 103 and 104.

106. To prevent departing from the Nepal: (1) In cases where any person does not pay the tax within the time limit due for the payment of tax, the Tax Department may, by giving a written notice to the concerned office of Government of Nepal, issue an order to prevent such person from leaving the country for a period not exceeding 72 hours from the date of expiration of the time of issue of the notice to such person to pay tax.

(2) In cases where any additional act has to be done during the period of time mentioned in Sub-section (1), the Department has to obtain prior leave of the Court of Appeal.

(3) In cases where the person referred to in Sub-section (1) pays tax or the department thinks that such person has made satisfactory arrangement on payment of tax, it may withdraw such order by giving a notice to the concerned office pursuant to Sub-section (1).

107. Officer employee of entity to be made responsible: (1) In cases where any entity does not observe anything required to be observed under this Act, each person who acts as the officer of that entity at that time shall be responsible for that.

(2) In cases where any entity does not pay tax on the date due for payment of tax, all officers who are incumbent in that entity for the time being or incumbent until before six months shall be jointly and severally liable to pay that tax.

(3) Notwithstanding anything contained in Sub-sections (1) and (2), these Sub-sections shall not be applicable in the following circumstances:-

(a) Where the entity has committed such offense without knowledge and consent of such person, and

(b) Where that person has, in order to avoid such offense, observed or exercised care, effort and skill which a reasonable man would observe or exercise in similar circumstances.

(4) In cases where any person pays the tax required to be paid pursuant to Sub-section (2), that person may do as follows:-

(a) To recover the amount which he has so paid from that entity,

(b) For purposes of clause (a), to so hold under own control the property including the moneys of that entity which is under his possession or which may come under his possession that it is not in excess of the amount so paid.

(5) In cases where any person holds any property under his control pursuant to clause (b) of Sub-section (4), the entity or any other person shall not be entitled to make any claim against such person.

Explanation: For purposes of this Section, "officer of any entity" means the manager of that entity or any person who acts in that capacity.

108. Recovery of tax from recipient: (1) Each recipient has to give a notice of the matter to the Department no later than Fifteen days of the date of appointment to the post of recipient or the date of having possession of the property situated in Nepal, whichever is earlier.

(2) The Department has to give a written notice to the person in arrear of tax on the amount to be paid.

(3) On receipt of the notice referred to in Sub-section (1), the recipient has to do as follows:-

(a) To set aside the amount notified by the Department under Sub-section (2) after making payment of the loan, if any, which is preferential to the tax payable pursuant to Sub-section (2), subject to clause (c) of Sub-section (2) of Section 103, from the proceeds of the sale of the required portion of the property which have come under possession of the recipient, and

(b) To pay to the Department the amount so set aside for his tax liability on behalf of the person in arrear of tax.

(4) It shall be the personal liability of the recipient to pay to the Department the amount equal to the tax liability payable by such person in arrear of tax to the extent that no amount has been set aside by the recipient pursuant to Sub-section (3).

(5) Provided that, the recipient may recover from the person in arrear of tax the amount of tax paid.

Explanation: For purposes of this Section,-

(a) "Recipient" means any of the following persons:

(1) A liquidator,

(2) A person appointed from outside or by a court as a recipient in respect of any property or entity,

(3) A person possessing a property by mortgage,

(4) Heir apparent, administrator or manager of the property belonging to a deceased natural person, or

(5) A person looking after the affairs of an incapacitated natural person.

(b) "Person in arrear of tax" means the person whose property has come under possession of the recipient.

109. Recovery of tax from the person liable to pay tax: (1) In cases where the person in arrear of tax does not pay tax within the due date for payment of tax, the Department may, by giving a notice in writing, order any of the following payers to pay to it the amount to the extent of the amount of tax payable on behalf of the person in arrear of tax, within the date mentioned in that notice:-

(a) The person who has to pay amount to the person in arrear of tax,

(b) The person who holds money for or on behalf of the person in arrear of tax,

(c) The person who holds money on behalf of any third person in a manner to pay it to the person in arrear of tax, or

(d) The person who has got authority from the third party to pay the amount to the person in arrear of tax.

(2) The Department has to give a copy of the notice given to the payer pursuant to Sub-section (1) to the person in arrear of tax.

(3) Notwithstanding anything contained in Sub-section (1), the date mentioned in the notice referred to in that Sub-section shall not be earlier than the date mentioned in clauses (a) and (b):-

(a) The date on which the amount has to be paid to the person in arrear of tax or the date on which such amount has been held on his behalf, and

(b) The date on which the notice has been given pursuant to Sub-section (2).

(4) The amount paid by the payer pursuant to Sub-section (1) shall be deemed as paid to the person in arrear of tax. The person in arrear of tax or any other person shall not be allowed to claim such amount against the payer.

110. Recovery of tax from the agent of a non-resident person: (1) In cases where a non-resident person in arrear of tax does not pay tax within the due date for payment of tax, the Department may, by giving a notice in writing, order any person who is in possession of any property owned by the person who is in arrear of tax to pay tax from the amount equivalent to the market value of that property, on behalf of the person in arrear of tax, in respect of the tax liability of the third person, in the sum not exceeding the amount of tax payable by such person in arrear of tax, within the date mentioned in the notice.

(2) In cases where any person pays the amount of tax as per the order referred to in Sub-section (1), he may do as follows:-

(a) To recover the amount of such payment from the person in arrear of tax,

(b) For purposes of clause (a), to take under his control any property whatsoever, including the money belonging to the person in arrear of tax, which is or would come in his possession, in such a manner that it is not in excess of the amount so paid.

(3) In cases where any person takes possession of any property pursuant to clause (b) of Sub-section (2), the person in arrear of tax or any other person shall not be allowed to make any claim against such a person.

111. Institution of case on failure to pay tax: The Department may file a case in the concerned District Court for the recovery of tax from the person who does not pay tax on the due time-limit for payment of tax.

112. Remission: (1) In cases where the tax payable by any person cannot be recovered, Government of Nepal may remit such tax in full or in part.

(2) Notwithstanding anything contained in Sub-section (1), Government of Nepal may remit, in full or in part, the fee or interest imposed pursuant to Chapter-22.

113. Tax refund and adjustment of amount: (1) In cases where any person has paid tax exceeding the tax liability payable by him/her, the Department may give direction to subtract the excess amount of tax paid by him/her from the amount of tax payable by him pursuant to this Act. The Department has to refund the excess amount to be set by such subtraction to the concerned person.

(2) In cases where the tax in question is not to be paid along with the interest paid by any person pursuant to Section 119, the Department has to refund such interest to that person.

(3) Any person has to make an application to the Department, as prescribed, for the refund of the amount pursuant to Sub-section (1).

(4) The person who makes an application pursuant to Sub-section (3) has to make such application within two years from the latest date out of the following dates. In cases where an application is not made within that time-limit, the amount referred to in Sub-section (1) shall not be refunded:-

(a) The date of expiration of the income year existed by virtue of payment of the excess amount,

(b) The date on which the excess amount is paid, or

(c) The date on which is the case is decided.

(5) The Department has to give a notice in writing of the decision made by it on the application made pursuant to Sub-section (3).

(6) In refunding any amount of tax by the Department to any person by virtue of the order of a court or any other reason, the Department has to pay to such a person the interest as per the normal rate for the following period:-

(a) In cases where such tax refund is related to the excess tax adjustment available to any person in any income year pursuant to Sections 93, 94 or 100, the period between the due date for submission of the tax return pursuant to Section 96 and the date of tax refund, and

(b) In any other cases, the period between the date of payment by such person of the refundable tax and the date of tax refund.

(7) Tax deduction that can be claimed pursuant to Section 51 or 71 shall not be adjusted in any year, and such tax deduction shall not be adjusted in amounts or refunded pursuant to this Sub-section.

Provided that, in that year the tax deduction adjustment may be made in accordance with the provisions contained in Sub-section (2) of Section 4, Sub-section (4) of Section 51 and Sub-section (3) of Section 71.

Chapter-21

Review and Appeal

114. Decisions subject to administrative review, and procedures: (1) For purposes of this Act, the following decisions may be subject to administrative review:-

(a) Advance ruling issued by the Department pursuant to Section 76,

(b) Estimate made by the Department on, or decision made by it to estimate, the estimated tax payable by any person, pursuant to Sub-section (7) of Section 95,

(c) Decision made by the Department to order any person to submit the income return pursuant to Sub-section (5) of Section 96 or Section 97,

(d) Decision made by the Department on any application made by any person for the extension of the time-limit for submission of the income return pursuant to Section 98,

(e) Assessment of tax payable by any person for any income year pursuant to Section 100 or 101 or assessment of the fees and interest payable by any person pursuant to Section 122,

(f) Notice given by the Department requiring to set aside the amounts as receivable by any person as a recipient, pursuant to Sub-section (2) of Section 108,

(g) Decision made by the Department to order any person who holds moneys payable to the person in arrear of tax to pay the same to the Department pursuant to Sub-section (1) of Section 109,

(h) Decision made by the Department to order any person to pay tax of any person due and payable on behalf of a non-resident person pursuant to Sub-section (1) of Section 110,

(i) Decision made by the Department on any application made by any person for the refund of tax pursuant to Sub-section (5) of Section 113, and

(j) Decision made by the Department on any application made by any person for the extension of the time-limit for filing a complaint pursuant to Sub-section (3) of Section 115.

(2) Notwithstanding that the Department makes any decision on the matters mentioned in clauses (d), (i) and (j) of Sub-section (1), in cases where the Department does not give a notice of the decision to the applicant within thirty days after the making of the application pursuant to Section 98, Sub-section (3) of Section 113 or Sub-section (3) of Section 115, the decision may be subject to administrative review as if it were a decision to reject the application.

(3) In cases where the applicant does receive a notice of decision within the time-limit referred to in Sub-section (2) and registers information thereof with the Department, the decision made by the Department to reject the application mentioned in that Sub-section and notice thereof shall be deemed to have been served on that person on that date.

115. Application for administrative review: (1) A person who is not satisfied with any decision subject to administrative review as referred to in Section 114 may make an application to the Department against the decision within Thirty days of the date of receipt of a notice of that decision.

(2) The application as referred to in Sub-section (1) has to clearly set out the reasons and grounds for such review.

(3) In cases where the time limit for making application pursuant to Sub-section (1) expires and any person makes an application for the extension of time limit within Seven days from the date of expiration of the time limit, the Department may do as follows:-

(a) To extend the time limit for a period not exceeding Thirty days from the date of expiration of the time limit for making application pursuant to Sub-section (1), where there are reasonable reasons, and

(b) To give the applicant a written notice of the decision made by the Department on the application.

(4) The implementation of the decision mentioned in Sub-section (1) of Section 114 shall not be deemed to be affected from the making of application pursuant to Sub-section (1).

(5) Notwithstanding anything contained in Sub-section (4), the Department may hold in pending or otherwise affect the decision made pursuant to Sub-section (1) of Section 114 pending the settlement of the application made by any person pursuant to Sub-section (1).

(6) Notwithstanding anything contained in Sub-section (5), the provision contained in that Sub-section shall not apply until Fifty percent of the amount of tax payable is paid.

(7) The Department may do as follows on the application made by any person pursuant to Sub-section (1):-

(a) To accept or reject, fully or partly, the matters mentioned in the application, and

(b) To give a written notice of the decision on the application.

(8) In cases where the Department does not give the applicant a notice of the application within Ninety days from the date on which the application was made pursuant to Sub-section (1), the applicant may register information thereof with the Department and consider the application rejected by the Department.

(9) The concerned applicant has to give written information to the Department that he has considered the application as rejected pursuant to Sub-section (8). The decision made by the Department to reject such application and notice thereof shall be deemed to have been served on that person on the date on which such information was registered.

116. Appeal in the Revenue Tribunal: (1) A person who is not satisfied with any decision made to the Department pursuant to Section 115 may file an appeal to the Revenue Tribunal under the Revenue Tribunal Act, 2031(1974).

(2) The person who files an appeal pursuant to Sub-section (1) has to register a copy of the appeal with the Department within Fifteen days of the date of filing appeal.

(3) The implementation of the decision mentioned in Sub-section (1) of Section 114 shall not be deemed to be affected from the filing of an appeal pursuant to Sub-section (1).

(4) Notwithstanding anything contained in Sub-section (1) of Section 114, in cases where the Director General has made a decision subject to administrative review as mentioned in that Sub-section, an appeal may be filed to the Revenue Tribunal.